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It’s not just buybacks that emerge seemingly out of nowhere (technically, the tend to emerge out of select VWAP desks) to help lift stocks higher: month end is notorious for pension and mutual fund rebalancing flows, and in a month when stocks tumbled far more than bonds, funds are now catching up as they are mandated to buy a certain amount of stocks to balance their portfolios.

So how much in buying is there? Well, according to JPMorgan’s Nick Panigirtzoglou, “In the very near term, one flow that could support the equity market is potential month-end rebalancing by balanced mutual funds for which we estimate $65bn of equity buying by the end of this month.”

Goldman’s own estimate is for a net $12 billion of US equities to buy from US pensions given the moves in equities and bonds over the month. While this ranks in the 31st percentile amongst all buy and sell estimates in absolute dollar value over the past three years, Goldman notes that it is the biggest month-end estimate since the March 2020 collapse.

The post “Here Comes The Fund Rebalancing: $65 Billion In Month-End Buying” first appeared on January 28th, 2022 on Zerohedge.com

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